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how long does bankruptcy affect ability to purchase a home

  • July 22 2011 - Johnson City
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Answers (5)

Lana,

Your BK will no longer affect you for a VA, FHA, FannieMae or Freddie Mac loan. Some portfolio lenders do not allow a BK regardless as to how much time has passed.

Happy funding, Rudi
  • July 22 2011
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Profile picture for frankc45
I always thought a BK was worse than a short sale. Creditors are wiped out in 1 type of BK while only 1 creditor is wiped out or a reduction in debt for a short sale. It makes no sense. To be eligible for an [hotlink removed by Zillow moderator] on short sales is 3 years.
A lot of things need to change with lending laws and sadly it seems to happen every 20 yrs. stated loans were not the villains. They were available in 1992 at 70%, 720 credit, it was the 100%, lax underwriters doing a disservice, not the loan responsible lending program. 
  • July 22 2011
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Profile picture for Lanaleonard
Thank you for answers about how long bankruptcy etc. It has been about 8 yrs. and we have been building good credit over this time. But we have heard how hard it is now to get loans with all that has gone on with economy. Is that true, and do you think we've had enough time pass to have overcome the majority of the damage?
  • July 22 2011
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FHA allows you to close on a new home two years after a chapter 7 bankrupcty was discharged.  You must have re-established good credit since the time of the bankruptcy and would need to have good payment history since that time.

If you are looking for a conventional mortgage the wait times are even longer.

If you included a home in your bankruptcy you will need to wait until three years from the date the deed was recorded to close on a new home.  In addition, if you had an FHA mortgage that was included in the bankruptcy there may be a CAIVRS claim that was paid out on your mortgage.  If so, you will need to wait until three years from the date of the claim.  A lender can help you obtain this information if it applies to you.

  • July 22 2011
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Profile picture for jlghamilton
If it's Chapter 7, you need to wait two years after the discharge date to close on a house. So, you can start searching before two years pass, but you won't be able to close on a house until after that two year date.
  • July 22 2011
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